SOUTHERN RAILWAY

Real-Time Schedule of Rates

- N.Venkadesh, Sr.AFA/Pension

Office of The FA&CAO

Southern Railway

The Schedule of Rates (SOR) acts as a guiding value to compare the r= ates quoted in the tenders. The periodic exercise of bringing out the book on ‘Schedule of Rates’ serves this purpose. But the rates of items given in the compilation are very much applicable for the period in which it was collected and it sharply differs in future periods due to inflation. This reduces the efficacy of SOR a= s a benchmark rate and to that extent defeats it’s purpose.

To obtain the realistic SOR, on a given date, duly taking care of the price changes, it is suggested that SOR may be pegged with Consumer Price I= ndex (CPI) and Wholesale Price Index (WPI).

The SOR items may be classified under three categories. They are

= 1.fully labour component

= 2.fully material component and

= 3.partly labor and partly material components

For the labor component, CPI (industrial worker) 1982 base and for t= he material component, WPI 1981-82 base may be used to derive the price-adjust= ed rate of SOR. This gives the near market value of the item and can best be compared with the rate quoted by the contractor.

The main advantage of the price adjusted SOR is, unlike SOR, it will= be very close to the actual market rate for the given material on a given date= as shown below.

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The price adjusted SOR may be calculated as follows:

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Where, the sum of labour component and the material compon= ent is equal to 1.0 for all items.

The date of publication of the tender notice may be taken as the reference date for the current CPI / WPI (i.e. 200X CPI/WPI) and to easily workout the ‘price adjusted SOR’ the SORs may be brought out in= a CD-ROM along with the required program.

Although the changes in price level is taken care of while arriving = at the price adjusted SOR, it will not give the exact market price, because CPI and WPI represent a general price level changes in the economy for a defined basket of goods. Hence there is always a possibility of minor difference between the price adjusted SOR and the market price, which is represented in the above diagram.

This kind of price adjusted SOR, closely represents the market price, derived on the basis of CPI and WPI enhances the confidence over the SOR and reduce the dependence on the previous accepted rates.

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